The Automatic IRA Act of 2024 would establish new rules allowing employers to set up automatic individual retirement accounts for their employees. Under the bill, employers with more than ten employees would be required to either maintain their own retirement plan or facilitate an automatic IRA arrangement where employees automatically have a percentage of their paycheck deposited into an IRA unless they opt out. The contribution rate would start at 6 percent of compensation in the first year and automatically increase to 10 percent over subsequent years, though employees can change their contribution level at any time. Employers who fail to establish or facilitate such an arrangement would face a penalty of $10 per employee per day of non-compliance, with an annual cap of $500,000 for unintentional failures. Additionally, the bill would provide a $500 annual tax credit to small employers with 100 or fewer employees who set up automatic IRA arrangements for three years beginning in 2025. The bill would take effect for plan years starting after December 31, 2026, and would override any state laws that prohibit or restrict automatic IRA arrangements, though it includes exceptions for state-mandated programs enacted before 2027.
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